Effects of Antidumping Duties with Bertrand Competition: Some Evidence for Frozen Catfish Fillets

Abstract

Antidumping duties are popular in the United States because under the Byrd Amendment domestic industry gets to keep tariff revenues. However, whether antidumping duties are an effective instrument of protection depends crucially on the tariff's ability to increase demand for the home good. Under Bertrand competition, the Byrd Amendment enhances tariff effects on the home price and trade flows in comparison to perfect competition. Assuming Bertrand competition and differentiated products, price-reaction functions of frozen catfish fillets are derived and estimated jointly with a demand equation using monthly data for the period January 1999 - December 2005. An inverse demand equation for farm-level products is also added to explore the efficacy of the tariff on price of farmed catfish. The estimated increase associated with the duty is exhibited tiny in price and sales of domestic fillets but insignificant in farm price. The result suggests antidumping duties are a weak tool for protecting the domestic catfish industry.antidumping tariff, Bertrand competition, Byrd Amendment, catfish, price, International Relations/Trade, Resource /Energy Economics and Policy,